Retained earnings are the accumulated end-of-year balances of your small business. At the end of each fiscal year -- after all the invoices have gone out and all the bills paid -- the negative or positive balance for your business is transferred to a new account known as Retained Earnings in QuickBooks. The transfer brings your business' balance back to zero for the new fiscal year and helps you keep track of how your business accumulates or loses capital.

How Retained Earnings Works

QuickBooks automatically sets up an equity account called "Retained Earnings" when you set up a new company with the software package. Depending on the closing date you provide for your fiscal year, QuickBooks also automatically transfers the balance from your business' other accounts to Retained Earnings on that date. From an accounting perspective, this transfer is necessary to ensure that your numbers for the current fiscal year reflect only transactions and your business' performance for the current period. The Retained Earnings account also helps you track how much capital your business has for expenses like new machinery or payments to partners or owners.

Viewing the Account

You can easily view your Retained Earnings account from Reports by clicking on the menu and selecting "Company & Financial." Then click on "Balance Sheet Standard" and Retained Earnings will appear under the Equity section of the balance sheet. To view transactions in the account, click on the "Company" menu and select "Chart of Accounts." Click on the "QuickZoom" button next to the Retained Earnings entry at the bottom of the Chart to see a full list of transactions.

Adjusting the Account

QuickBooks allows you to draw from the Retained Earnings account through balance sheets, journal entries or by writing a check. Any time you enter a new transaction in a balance sheet you can specify a total and select Retained Earnings from the Account drop-down list to draw from equity funds. You can also specify the Retained Earnings account when adding an entry to your General Journal or when entering check information after writing a check from Retained Earnings funds. Just be sure to save or record the information every time you enter new data to adjust your Retained Earnings balance.

Help Finding the Account

Although Retained Earnings is an automatically generated account, you may have deleted or disabled the account if you are having trouble finding it. To view inactive accounts, click on the "Lists" menu and select "Charts of Accounts." Click on the "Accounts" button and then the "Show Inactive Accounts" button and remove the "X" next to Retained Earnings to reactivate the account. You can also generate a new Retained Earnings Account by going to the "Reports" Menu, selecting "Company & Financial" and clicking on the "Balance Sheet Standard" report. Generating the report will prompt QuickBooks to create a new Retained Earnings account if the previous one has been deleted.

About the Author

Edward Mercer began writing professionally in 2009, contributing to several online publications on topics including travel, technology, finance and food. He received his Bachelor of Arts in literature from Yale University in 2006.